Things You Should Know Before Borrowing Money

There comes a time in the lives of millions of people from all around the world, when they either need to borrow money, or are asked to lend money. Knowing the ins and outs of the practice is essential to making good decisions, and making sure that you are not affected from a financial standpoint.

With this in mind, it has been often said that money is quite personal, which is why people often face emotional trouble when it comes down to either borrowing, or lending money. In this article, we will talk about some of the main tips associated with both borrowing and lending, as an effort to make sure that you have decent knowledge in case you are ever put in the two situations mentioned above.

Borrowing money

When it comes down to borrowing money, doing it from friends or family members is not always a wise idea, considering the fact that it becomes a lot more emotional, and it can put some strain on both parties involved. With this in mind, it may be better to considering borrowing money from an alternative means, such as a bank, or lending company. While it is a bit more risky, it is safer in the long run, as there are clear conditions set-up and you won’t end up facing any surprises.

If you must borrow money from a friend, do it properly

It is often considered a good habit to ask friends for a loan in writing, and attempt to give out as much transparency as possible. By doing so, you will not damage the relationship between your and the lender, but also increase your chances of being able to borrow in the future, if you ever need to do so again. Also, avoid asking for astronomical sums, and attempt to disclose what you’re planning to do with the money, as this can create a better sense of trust.

Only borrow money from the people you trust

Choosing the person that you will borrow from can be quite difficult. Firstly, you can’t expect anyone to borrow you money out of sympathy, and secondly, it is important to only talk to people who you truly trust, in order to avoid getting the word out about your financial difficulties, but also to maintain a better relationship with the person that you are borrowing from.

Consider payday loans

If you’re in need of an urgent loan, don’t have an excellent credit score, or much to offer as collateral, then your best bet would be to choose a payday loan. These particular loans are designed in such a way, that they allow you to pay the loan back once you get your next pay check, so they represent a great way of getting some cash quickly, while also not having to worry about much in return.

Lending money

Avoid getting confrontational

Once you’ve made the decision of helping your friend or family member with some money, you shouldn’t get confrontational with them, or address the person in question as if they owe you something. By doing so, you will damage the relationship between you too, and also risk not getting your money back. Instead, if your friend is facing trouble paying the sum back, try to confront them in a friendly manner, and do inform that them you are in need of the cash back. Communication is indeed key, so if you don’t get your message across, you will not get your sum back. Based on this, don’t be afraid to confront your friend, but try to do it nicely at first. You also shouldn’t be afraid to drop hints, as the person in question, may already have the money, but they may have simply forgotten about paying it back to you. Dropping hints will also encourage your friends to be quicker in paying you back.

Attempt doing everything in writing

In case you’re worried about not getting your money back in full, or not quickly enough, you can attempt to do everything in writing. Simply sign a contract with your friend, disclosing the amount being borrowed, when it should be paid back, if there is any interest and what the repercussions are. While this likely won’t help you much in court, having some form of ‘official’ document will likely encourage your friend to give the money borrowed back as soon as possible.
Based on everything that has been outlined so far, by following these tips, you’ll be safer both when borrowing and lending money. Simply put, communicate efficiently, avoid getting confrontational and always think twice about borrowing or lending money from a friend, considering the fact that there are a good number of risks associated with the practice, and also numerous lending companies and banks willing to leave you out of the hassle.